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Cablegate: Dart: Iraq's Public Distribution System--Completion Of

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 05 KUWAIT 003496

SIPDIS

STATE ALSO PASS USAID/W
STATE PLEASE REPEAT TO IO COLLECTIVE
STATE FOR PRM/ANE, EUR/SE, NEA/NGA, IO AND SA/PAB
NSC FOR EABRAMS, SMCCORMICK, STAHIR-KHELI, JDWORKEN
USAID FOR USAID/A, DCHA/AA, DCHA/RMT, DCHA/FFP
USAID FOR DCHA/OTI, DCHA/DG, ANE/AA
USAID FOR DCHA/OFDA:WGARVELINK, BMCCONNELL, KFARNSWORTH USAID FOR
ANE/AA:WCHAMBERLIN
ROME FOR FODAG
GENEVA FOR RMA AND NKYLOH
ANKARA FOR AMB WRPEARSON, ECON AJSIROTIC AND DART
AMMAN FOR USAID AND DART

E.O. 12958: N/A
TAGS: EAID PREF IZ WFP
SUBJECT: DART: IRAQ'S PUBLIC DISTRIBUTION SYSTEM--COMPLETION OF
FIRST MONTH

-------
SUMMARY
-------

HAVING BEEN DISRUPTED BY THE WAR IN MARCH OF THIS YEAR, IRAQ'S
PUBLIC DISTRIBUTION SYSTEM (PDS) RESUMED NATIONWIDE FOOD RATION
DISTRIBUTION TO 27 MILLION IRAQI'S DURING THE FIRST WEEK OF JUNE.
THE OVERALL CURRENT DISTRIBUTION OF FOOD AND NON-FOOD ITEMS IN
THE COUNTRY FOR THE MONTH OF JUNE TOTALS 396,013 METRIC TONS
(MT). IN COORDINATION WITH THE WORLD FOOD PROGRAM (WFP), THE
IRAQI MINISTRY OF TRADE (MOT) COORDINATED THIS FIRST POST-
CONFLICT PDS RATION DISTRIBUTION, RELYING ON A NATIONWIDE NETWORK
OF 44,000 FOOD AGENTS TO DISTRIBUTE THE RATIONS TO ALL IRAQI
CITIZENS. THE JUNE DISTRIBUTION IS GENERALLY BEING CHARACTERIZED
AS A "SUCCESS" BY MOT OFFICIALS, WFP, AND RATION RECIPIENTS,
DESPITE SOME RATION ITEMS MISSING FROM THE RATION BASKET. IT IS
ESTIMATED THAT IN 15 OF THE COUNTRY'S 18 GOVERNORATES, WHERE
SECURITY ALLOWED FOR ADEQUATE DISTRIBUTION AND REPORTING, MORE
THAN 98 PERCENT OF THE FLOUR/FOOD AGENTS COLLECTED THEIR MONTHLY
ALLOCATIONS FOR DISTRIBUTION TO FINAL BENEFICIARIES. THE PDS
RATION DISTRIBUTION FOR JULY IS UNDERWAY WITH NO SIGNIFICANT
PROBLEMS REPORTED. AS OF THE BEGINNING OF JULY, WFP REPORTS THAT
1,264,743 MT OF FOOD WERE DISPATCHED THROUGHOUT IRAQ SINCE APRIL.

-----------
BACKGROUND
-----------

THE DISTRIBUTION OF WHAT IS NORMALLY ABOUT 500,000 MT PER MONTH
OF FOOD AND NON-FOOD COMMODITIES IN IRAQ RESTARTED IN EARLY JUNE
AFTER A TWO AND ONE- HALF-MONTH DISRUPTION DUE TO THE CONFLICT IN
THE COUNTRY. THE SIGNIFICANCE OF THE PDS TO THE FOOD SECURITY OF
THE IRAQI POPULATION CANNOT BE OVERSTATED. THE RATIONING SYSTEM,
DESIGNED BY THE FORMER REGIME, STARTED IN THE EARLY 1990S WHEN
FOOD MARKETS WERE DISRUPTED AS A RESULT OF THE FIRST GULF WAR.
IT EVOLVED AS THE PRIMARY SOURCE FOR DISTRIBUTED BASIC FOOD AND
NON-FOOD COMMODITIES RECEIVED UNDER THE UNITED NATIONS OIL-FOR-
FOOD (OFF) PROGRAM TO ALL IRAQIS STARTED IN 1996. COMMODITIES
WERE MOSTLY IMPORTED THROUGH THE OFF PROGRAM, THENAND THEN PARSED
OUT THROUGH THE PDS. THIS RATION SYSTEM IS DESIGNED TO COVER 100
PERCENT OF THE IRAQI POPULATION WITH BASIC FOOD AND NON-FOOD
SUPPLIES. SIXTY PERCENT OF THE POPULATION DEPEND ON THESE
RATIONS AS THEIR ONLY SOURCE OF FOOD. THE SYSTEM INCLUDES A
COMPUTERIZED REGISTRATION/RATION CARD SYSTEM--STORING INFORMATION
ON INDIVIDUAL RATION LEVELS, STORAGE OF LOCAL AND OFF-PURCHASED
COMMODITIES--PARTICULARLY WHEAT GRAIN--THROUGH LOCAL PUBLIC
WAREHOUSES AND GRAIN SILOS, AND DISTRIBUTION THROUGH A NATIONWIDE
RATION AGENT NETWORK. UNDER THE CURRENT SIX-MONTH EMERGENCY
OPERATION, WFP PLANS TO IMPORT APPROXIMATELY 2.2 MILLION MT OF
FOOD COMMODITIES TO IRAQ, LARGELY TO SUPPORT THE PDS.

-------------------------
JUNE RATION DISTRIBUTIONS
-------------------------

JUNE IS WIDELY VIEWED AS A SUCCESS. WFP REPORTS THAT
APPROXIMATELY 94 PERCENT OF THE FOOD AGENTS COLLECTED THEIR
MONTHLY ALLOWANCES FOR JUNE. THREE GOVERNORATES--AL ANBAR,
DIYALA, AND SALAH-AD-DIN--WERE PLAGUED BY SECURITY CONCERNS THAT
LIKELY HAMPERED FOOD DISTRIBUTION AND HAVE LED TO UNDERREPORTING.
INFORMATION THAT WE DO HAVE FROM THESE THREE GOVERNORATES
INDICATE THAT ONLY 55 PERCENT OF THE RATION ITEMS THAT SHOULD
HAVE BEEN DISTRIBUTED WAS ACTUALLY COLLECTED BY THE FOOD AGENTS.
THE NATIONAL AVERAGE COVERAGE RATE, NOT INCLUDING THESE
GOVERNORATES, IS A VERY SUCCESSFUL 98 PERCENT. IN TOTAL, REPORTS
TO DATE INDICATE THAT 396,013 MT OF COMMODITIES HAVE BEEN
DISTRIBUTED TO FOOD AGENTS. AS OF THE END OF JUNE, TOTAL
DISPATCHES TO IRAQ SINCE IMPORTS RESUMED IN APRIL, STAND AT
1,264,743 MT. NO MAJOR PROBLEMS HAVE BEEN REPORTED BY WFP FIELD
OFFICES FACILITATING AND MONITORING THE DISTRIBUTION PROCESS,
THOUGH CHALLENGES CONTINUE TO BE RELATED TO SECURITY FOR
WAREHOUSES, SILOS, AND TRUCK TRANSPORTERS IN THE SOUTHERN AND
CENTRAL GOVERNORATES. THE PRINCIPAL CHALLENGE IN THE NORTHERN
GOVERNORATES IS THE TRANSITION FROM FULL WFP ADMINISTRATION OF
THE PDS TO LOCAL ADMINISTRATION BY NOVEMBER.

THE PDS RATION CYCLE NORMALLY TAKES PLACE OVER A PERIOD OF
APPROXIMATELY 20 DAYS. FOR JUNE, THE RATION PERIOD CONTINUED
THROUGHOUT MOST OF THE MONTH AND INTO EARLY JULY FOR THOSE AREAS
WHERE SECURITY AND OTHER PROBLEMS PREVENTED COMPLETION WITHIN THE
20 DAYS. THE JUNE RATION, THAT IS BASED ON AVAILABILITY OF
STOCKS, CONTAINED 9 KG OF WHEAT FLOUR, 3 KG OF RICE, 2 KG OF
SUGAR, 0.2 KG OF TEA, 1.0 KG OF VEGETABLE OIL, 0.25 KG OF PULSES,
0.25 KG OF SOAP, AND 0.5 KG OF DETERGENT. INFANTS UNDER THE AGE
OF ONE YEAR RECEIVE 3.6 KG OF INFANT FORMULA, 0.25 KG OF SOAP,
AND 0.5 KG OF DETERGENT. THESE QUANTITIES REFLECT AN ABSENCE OF
ADULT MILK AND LOWER QUANTITIES OF OIL AND PULSES IN A RATION.
THE JULY RATION MIX INCREASED FOR PULSES AND MILK POWDER,
ALTHOUGH STILL NOT AT THE FULL RATION LEVEL.


--------------------------------
ACCESS TO AND QUALITY OF RATIONS
--------------------------------

A SERIES OF RADIO AND TELEVISION BROADCASTS FOR THE IRAQI
POPULACE BEGAN ON MAY 30, EXPLAINING WHAT THE RATION BASKET WOULD
CONTAIN AND WHEN RATION RECIPIENTS SHOULD GO TO THEIR REGISTERED
FOOD AGENTS TO COLLECT THE FOOD. THE DISTRIBUTION OF FALSE
RATION CARDS WAS REPORTED IN SOME GOVERNORATES, AND A GENERAL
BELIEF THAT THE RATION WOULD BE EXPANDED BEYOND PREVIOUS LEVELS,
LED TO UNREALISTIC EXPECTATIONS IN SOME AREAS. THESE FALSE
RUMORS ARE ALSO EMERGING FOR THE JULY CYCLE; HOWEVER, THEY ARE
BEING COUNTEREDCORRECTED BY MOT ANNOUNCEMENTS. RATION RECIPIENTS
ARE GENERALLY PLEASED TO BE RECEIVING BETTER QUALITY COMMODITIES
WITH THE JUNE DISTRIBUTION, AS THERE HAD BEEN A NUMBER OF
COMPLAINTS OVER THE YEARS ABOUT THE QUALITY OF RATIONS,
PARTICULARLY RICE AND FLOUR. RATION RECIPIENTS ARE ESPECIALLY
PLEASED TO RECEIVE VEGETABLE OIL FOR THE FIRST TIME RATHER THAN
GHEE. ON THE OTHER HAND, THERE HAVE BEEN REPORTS THAT THE U.S.
SOYBEAN-BASED VEGETABLE OIL, UNFAMILIAR TO IRAQI TASTES, IS NOT
AS WELL LIKED AS OTHER VEGETABLE OILS. LIKEWISE, THE HIGHLY
REFINED WHEAT FLOUR FROM THE U.S. IS NOT AS SUITABLE AS MORE
COARSELY GROUND WHEAT FOR MAKING FLAT BREADS BAKED BY THE TYPICAL
IRAQI HOUSEHOLD.
FOR THOSE BENEFICIARIES PREVIOUSLY REMOVED FROM THE PDS, THE MOT
ESTABLISHED REREGISTRATION PROCEDURES. BENEFICIARIES WHO HAD
BEEN REMOVED FROM THE PDS ROLES, LOST THEIR RATION CARDS, WERE
DISPLACED WITHIN THE COUNTRY, OR HAD CHANGES IN THEIR FAMILY
STATUS WERE ABLE TO REREGISTER AT THEIR PRESENT LOCATION TO
ENSURE THEIR PROPER RECEIPT OF RATION COMMODITIES. THIS IS
PARTICULARLY NOTEWORTHY IN THE MOST SOUTHERN GOVERNORATES, WHICH
HAD A NUMBER OF DISENFRANCHISED IRAQIS SUCCESSFULLY REREGISTERED.
THIS PROCESS, HOWEVER, DID NOT ALWAYS WORK AS PLANNED. IN
DIYALA, FOR EXAMPLE, THERE ARE AN ESTIMATED 48,000 INTERNALLY
DISPLACED PERSONS WEREPERSONS, MANY OF WHOM WERE NOT ABLE TO
REGISTER TO RECEIVE THEIR JUNE RATION ON TIME. THE DANISH
REFUGEE COUNCIL, AN NGO PARTNERING WITH WFP, IS WORKING WITH THIS
GROUP TO FACILITATE THE REGISTRATION PROCESS AND TO DISTRIBUTE
THE JUNE RATIONS.

---------------------------------------------
INCREASED COSTS TO FOOD AGENTS/OVERCHARGING
---------------------------------------------

RATION RECIPIENTS PAY A NOMINAL FEE TO FOOD AGENTS FOR THE PDS
RATIONS THEY RECEIVE. THE JUNE FEE FOR THE SOUTHERN AND CENTRAL
GOVERNORATES WAS THE EQUIVALENT OF 20 CENTS U.S.--250 IRAQI
DINARS (ID)--PER RECIPIENT AND IN THE NORTHERN GOVERNORATES THE
FEE WAS EQUIVALENT TO 40 CENTS U.S. IN ORDER TO COMPENSATE FOR
THE HIGHER TRANSPORT AND LOADING/OFF-LOADING COSTS, SOME FOOD
AGENTS CHARGE MORE THAN THE ALLOWED RATION FEE. FOOD AGENTS
CHARGING 600 ID IS NOT UNCOMMON IN SOME GOVERNORATES, WITH
REPORTS OF AGENTS CHARGING IN EXCESS OF 1,000 ID PER BENEFICIARY.

THIS OVERCHARGING WAS DUE, IN PART, TO THE HIGHER TRANSPORTATION
COSTS INCURRED BY AGENTS. THE ALLOWANCE THE MOT PROVIDED TO THE
FOOD AGENTS FOR TRANSPORTATION COSTS DID NOT TAKE INTO ACCOUNT
THE INCREASING PRICE OF FUEL OR THE AGENTS MAKING RETURN TRIPS TO
WAREHOUSES TO COLLECT FOOD THAT HAD ARRIVED AFTER INITIAL PICKUP.
SOME FOOD AGENTS COMPLAINED THAT IT WAS NO LONGER WORTH THEIR
WHILE TO CONTINUE WORKING WITH THE PDS. IN RESPONSE TO THESE
ISSUES, THE MOT ANNOUNCED THAT THE ALLOWANCE FOR AGENTS WOULD BE
INCREASED FOR THE JULY PDS CYCLE. FROM THE 250 ID COLLECTED FROM
THE RATION RECIPIENTS IN THE SOUTHERN AND CENTRAL GOVERNORATES,
FOOD AGENTS CAN NOW KEEP 50 ID IN URBAN AREAS AND 60 ID IN RURAL
AREAS, TO OFFSET THEIR HIGHER TRANSPORTATION COSTS. IN ADDITION,
AGENTS ARE NOW ALLOWED TO RETAIN 50 ID PER RECIPIENT AS A PROFIT,
UP FROM 20 ID IN JUNE. THESE ADDITIONAL ALLOWANCES REPRESENT AN
INCREASE OF APPROXIMATELY 240-280 PERCENT OVER THE JUNE CHARGES
THE AGENTS WERE ALLOWED TO RETAIN. EQUIVALENT COMPENSATION HAS
ALSO BEEN INTRODUCED IN THE NORTHERN GOVERNORATES FOR JULY. IT
IS HOPED THAT THESE INCREASED AMOUNTS WILL PREVENT AGENTS FROM
OVERCHARGING. ENFORCEMENT OF OVERCHARGING BY MOT DID NOT OCCUR
IN JUNE DUE TO THE MANY ISSUES INVOLVED WITH THE PDS STARTUP, BUT
BEGAN WITH THE JULY DISTRIBUTION.

ALSO, A SIGNIFICANT SEGMENT OF THE POPULATION IS SELLING PART OF
THEIR RATION--GENERALLY WHEAT FLOUR--TO GENERATE ENOUGH MONEY TO
PAY THEIR RATION FEES OR TO BUY OTHER FOOD COMMODITIES SUCH AS
FRESH FRUITS, VEGETABLES, AND MEAT. THE WFP AND MOT'S MONITORING
AND EVALUATION UNITS CONTINUE TO MONITOR THIS TREND.
HOWEVER, THERE IS NO INDICATION OF AN ORGANIZED, LARGE-SCALE
DIVERSION OF FOOD AID FROM THE PDS FOR COMMERCIALIZATION IN URBAN
MARKETS.

-- -----------------------------------
SECURITY--THE SINGLE LARGEST ISSUE
-----------------------------------

SECURITY REMAINS A SIGNIFICANT CONCERN FOR MOT AND WFP IN MAKING
THE PDS FULLY FUNCTIONAL. COALITION FORCES (CF) ARE NOW
PROTECTING MANY MOT FACILITIES IN THE SOUTHERN AND CENTRAL
GOVERNORATES, INCLUDING WAREHOUSES AND SILOS. MOT OFFICIALS ARE
IN THE PROCESS OF HIRING THEIR OWN GUARD FORCE. WORKING WITH THE
MOT, WFP HAS PROVIDED THE COALITION PROVISIONAL AUTHORITY (CPA)
WITH A COMPLETE LIST OF SILOS, MILLS, AND WAREHOUSES IN THE
COUNTRY IN AN ATTEMPT TO ENSURE THAT PROPER SECURITY ARRANGEMENTS
CAN BE MADE. CPA IS TRAINING MOT GUARDS TO PROTECT WAREHOUSES,
PARTICULARLY IN BAGHDAD AND AL BASRAH--TWO OF THE MAIN STORAGE
HUBS PLAGUED BY LOOTING. ALSO IN AL BASRAH, THE RATION
REGISTRATION CENTER HAS BEEN BURNT AND 18 TRUCKS DAMAGED. WFP IS
HELPING TO GATHER LOST DATA, SUPPLY NEW COMPUTERS, AND ORGANIZE
COMMERCIAL TRANSPORT FOR THE RATIONS.

IN BAGHDAD, FOR EXAMPLE, NEARLY 500 GUARDS ARE NEEDED TO PROTECT
RATION ITEMS IN 14 FACILITIES INCLUDING SILOS, WAREHOUSES, AND
DISTRIBUTION CENTERS. MANY ARE WITHOUT UNIFORMS AND EVEN FEWER
HAVE GUNS. IN A MID-JUNE ASSESSMENT OF SIX FACILITIES, FOUR HAD
CF PRESENCE. ONGOING UNREST AND THEFT AT THE AL HURRIYA
WAREHOUSE MEANT THAT WFP WAS FORCED TO TEMPORARILY WITHDRAW ITS
PRESENCE UNTIL CF RETURNED AND THE SITUATION STABILIZED.

THE HIGHJACKING OF TRUCKS CARRYING PDS COMMODITIES, PARTICULARLY
OVER A 150-MILE STRETCH FROM SAFWAN (JUST OVER THE KUWAIT BORDER
TO AN NASIRIYAH) WAS QUITE PROBLEMATIC IN JUNE. THESE
HIGHJACKINGS HAVE BECOME INCREASINGLY VIOLENT WITH REPORTS OF
DEATHS AND MISSING TRUCKERS. ON A NUMBER OF OCCASIONS, THE
KUWAIT-OWNED TRUCKS, LADEN WITH WFP FOOD, REFUSED TO TRAVEL.
COALITION FORCES, WFP, AND TRUCKERS' REPRESENTATIVES CONTINUE TO
WORK ON WAYS TO REDUCE THE PROBLEM. BECAUSE THE HIGHJACKINGS ARE
DIRECTED MORE AT NON-IRAQI TRUCKS, WFP HAS RESTRICTED POINT-OF-
ENTRY FOR FOOD FROM KUWAIT, TO UMM QASR AND AL BASARH.

-----------------------------------------
TRANSITION OF PDS TO FULL MOT MANAGEMENT
-----------------------------------------

THE TRANSFER OF OWNERSHIP FOR PDS COMMODITIES AND PIPELINE
MANAGEMENT FROM WFP TO MOT CONTINUES. WFP IN KIRKUK (NINAWA
GOVERNORATE), FOR EXAMPLE, HAS SIGNED OVER RESPONSIBILITY OF ALL
COMMODITIES TO THE MOT, AND IS NOW IMPLEMENTING ONLY PRIMARY
TRANSPORT, OFF-LOADING, AND MONITORING. BOTH WFP AND MOT SIGN
THE WAYBILLS FOR RECEIPT AT THE SILO OR WAREHOUSE, AND MOT IS
THEN RESPONSIBLE FOR COORDINATING FOOD AGENTS' TRANSPORT AND
DISTRIBUTIONS. HOWEVER, WFP REMAINS ULTIMATELY ACCOUNTABLE TO
ITS DONORS FOR ENSURING THAT THE COMMODITIES ARE DISTRIBUTED
PROPERLY. HENCE, WFP MAINTAINS ITS MONITORING FUNCTION.

ON JULY 16, CPA PRESENTED A LETTER TO WFP, ACKNOWLEDGING THAT WFP
AND CPA MUST MOVE QUICKLY TO TRANSFER RESPONSIBILITY FOR THE PDS
IN THE NORTHERN GOVERNORATES OF AS SULAYMANIYAH, ARBIL, AND DAHUK
TO IRAQI AUTHORITIES. CPA DESIGNATED THE FOOD DEPARTMENT IN
ARBIL AS THE APPROPRIATE LOCAL AUTHORITY, AND WFP HAS BEGUN
IDENTIFYING CRITICAL NEEDS TO ENSURE A SMOOTH TRANSITION. THE
PRINCIPAL CHALLENGE IN THE NORTHERN GOVERNORATES IS THE
TRANSITION FROM FULL WFP ADMINISTRATION OF THE PDS TO LOCAL
AUTHORITY ADMINISTRATION BY NOVEMBER.

----------
CONCLUSION
----------

IN BAGHDAD, WFP, MOT, CPA, AND THE DART CONTINUE TO MEET
FREQUENTLY TO ADDRESS ISSUES RELATED TO THE PDS DISTRIBUTION
CYCLE. IDEALLY, BEFORE THE END OF THE CURRENT WFP EMERGENCY
OPERATION IN OCTOBER, IRAQI AUTHORITIES CAN ASSUME FULL
RESPONSIBILITY FOR THE PDS OR FIND OTHER MECHANISMS TO ENSURE
FOOD SECURITY IN THE COUNTRY. SPELLING OUT THE OPTIONS FOR THIS
AND STEPS TO IMPLEMENT A TRANSITION IS, IN PART, THE FOCUS OF A
WORKING GROUP, INCLUDING USAID, CPA, WFP, AND THE MOT.


UNCLASSIFIED

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